Corporate Dealer Michael Judge On Making Payments To China
OFX Corporate Dealer
Australians have long done business with Asia, and in particular, China. Over the past year, news organisations like the ABC, News.com.au, and the Sydney Morning Herald have reported on the growth of the Chinese economy slowing.
Despite this, economic growth in China is still said to be exceptional, and many Australians continue to do business there. So what do you need to know about doing business with China?
Know which currency or currencies you need to transfer
The majority of Chinese businesses tend to trade in CNY, the offshore CNH or USD. If you’re an importer, your supplier may ask you to pay in any one of these currencies. Ensure you pay the correct currency to the correct account to prevent delays.
You’ll also want to choose a foreign exchange company that offers all three currencies, allowing you to trade with different businesses throughout the country. At OFX, we offer over 50 different currencies, including CNY, CNH, and USD.
Know whether you’re crediting the account of an individual or a business
Due to domestic regulations on CNY, personal accounts cannot be credited for business purposes like they can in other parts of the world. With that in mind, when asked to pay USD to an individual, it may be worth asking why the recipient does not have a business account.
Have the details of your primary contact to hand
You must also know the full name and phone number of the main contact at the company you’re paying. This is so that Chinese banks can validate payments with the recipient. In these situations, it’s best to add the contact as a reference when making the payment.
Ensure the reference and account details are correct
With payment references so heavily monitored by China’s banks, it’s important to assign a correct reference to your payment. The reference is also often validated with the recipient. If it cannot be validated, then it may cause delays.
China is known to be very strict with account details. If a space, comma or full stop is in the wrong place, the result may be a failed payment. Always double check all details.
Be sure to check for fraud
Many people negotiate with exporters by e-mail and instant messaging. These channels are highly vulnerable to cyber-crime as you can’t hear or see your business counterpart.
It always pays to be aware of sophisticated fraud. There is one particular fraud that exists whereby e-mails are intercepted at the last minute asking you to credit a different account. To avoid falling victim to this, ensure you confirm any changes with the supplier directly using an alternative, established contact method such as a known telephone number.